Question
Mary Abbott is a long-time employee of Love Enterprises, a manufacturer and distributor of farm implements. Abbott plans to retire on her 65th birthday, 5
Mary Abbott is a long-time employee of Love Enterprises, a manufacturer and distributor of farm implements. Abbott plans to retire on her 65th birthday, 5 years from Jan.1,2017. Her salary at Jan.1,2017 is $48,000 per year, and her projected salary for her last year of employment is $60,000.
Love Enterprises sponsors a defined benefit pension plan. It provides for an annual pension benefit equal to 60% of the employee's annual salary at retirment. Payments commence 1 year after the anniversay date of hos or her retirement. The discount and earnings rate on plan assets is 8%. The average life expectancy for employees is 80. Using PVof 1, PVAD of1, and PVOA of 1.(usethe appropriate factor from the tables provided).
Required:
1. Compute the PBO related to Abbott's pension benefits as of January 1, 2017.
2. Compute the ABO for the year ended December 31, 2017.
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